From the June 01, 2009 issue of Futures Magazine • Subscribe!

Make Money Trading: How to Build a Winning Trading Business

Make Money Trading:

How to Build a Winning Trading Business

By Jean Folger & Lee Leibfarth

Marketplace Books, Inc.

356 pages, $29.95

Trading for a living can be fatal to your finances without the right knowledge and training. The opportunity to make a living in this profession has become more alluring as millions of talented individuals lost their jobs as a result of the 2008-2009 financial industry meltdown. On the surface, trading for a living may appear simple and relatively easy to master. In reality, successful traders have spent years perfecting their skills and continue their learning process to achieve the next level.

Before deciding to trade, prospective individuals, as well as those who have recently begun trading need to be grounded in the basics to increase their probability of success. As far as day trading is concerned, industry statistics indicate that about 90% of the traders drop out after their first year, mostly due to depleting their capital.

The book’s authors, both traders and software developers, have written a practical, easy-to-read and comprehensive guide on the basics of trading for all types of traders including day traders, position traders, swing traders and scalpers. They emphasize that trading must be treated as a business from day one, otherwise success will be difficult to achieve.

The book covers all the critical aspects of trading; early on they explain risk and positive expectancy that are critical aspects of trading that must be mastered.

The authors discuss how to set up a trading desk, how to select software and how to choose a brokerage account. Essentials of charting, including the basic chart types, chart intervals, support and resistance, trend lines, pivot points, Fibonacci retracements, moving averages, pricing bands and oscillators are explained in detail. This is followed by how to properly place trades and includes a short discussion of trade automation.

The most insightful information for new traders reviews how to develop a detailed trading plan that includes order management, entry and exit rules, leverage and margin, profit targets and includes three practical examples of trading strategies with the TradeStation performance statistics. Also included is a comparison of different trading plans and three worksheets to track performance.

Finally, the authors review the preparation required for live trading and the importance of back-up procedures, the rationale for staying mentally focused, and the value of maintaining a trading journal to use as a learning tool. Rounding out the book is a discussion on how to evaluate your trading performance, how to keep your trading records, and a list of 10 rules for successful trading. Also included is a useful glossary of trading terms.

In summary, this book is a well-written primer on trading the markets for newbies contemplating trading or for those who are looking to enhance their trading skills. The books’ logical, step-by-step approach and detailed examples and charts provide a realistic view of the key components that need to be mastered before placing dollars at risk. Knowledge is the main ingredient in becoming a successful trader, and this book provides an excellent beginning step.

Leslie N. Masonson is president of Cash Management Resources, a financial consulting firm, and author of “All About Market Timing” and “Day Trading on the Edge.” Reach him at lesmasonson@yahoo.com.

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